Pensions Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Pensions Bill

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
84

125
Payment of scheme benefits
(1)
Subsection (2) applies where there is an assessment period in relation to an
eligible scheme.
(2)
The benefits payable to or in respect of any member under the scheme during
the assessment period must be reduced to the extent necessary to ensure that
5
they do not exceed the compensation which would be payable to or in respect
of the member for that period in accordance with this Chapter if—
(a)
the Board assumed responsibility for the scheme under this Chapter,
and
(b)
the assessment date referred to in Schedule 7 were the date on which
10
the assessment period began.
(3)
Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to a trustee
or manager of a scheme who fails to take all reasonable steps to secure
compliance with subsection (2).
(4)
Regulations may provide that, where there is an assessment period in relation
15
to an eligible scheme, the commencement of a member’s pension or other
benefits is, in such circumstances and on such terms and conditions as may be
prescribed, to be postponed for the whole or any part of the assessment period
for which he continues in employment after attaining normal pension age.
(5)
Nothing in subsection (2) applies to money purchase benefits.
20
126
Loans to pay scheme benefits
(1)
Subsection (2) applies where section 125(2) applies in relation to an eligible
scheme.
(2)
Where the Board is satisfied that the trustees or managers of the scheme are not
able to pay benefits under the scheme (reduced in accordance with section
25
125(2)) as they fall due, it may, on an application by the trustees or managers,
lend to them such amounts as the Board considers appropriate for the purpose
of enabling them to pay those benefits.
(3)
Where an amount lent to the trustees or managers of a scheme under
subsection (2) is outstanding at—
30
(a)
the time the Board ceases to be involved with the scheme, or
(b)
if earlier—
(i)
the time during the assessment period when an order is made
under section 11(3A) of the Pensions Act 1995 directing the
winding up of the scheme, or
35
(ii)
where no such order is made during that period, the time when
the assessment period ends because the conditions in section
137(2) or (5) are satisfied,

that amount, together with the appropriate interest on it, falls to be repaid by
the trustees or managers of the scheme to the Board at that time.
40
(4)
No loan may be made under subsection (2) after the time mentioned in
subsection (3)(b)(i).
(5)
In subsection (2) the reference to “benefits” does not include money purchase
benefits.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
85

(6)
In subsection (3) “the appropriate interest” on an amount lent under subsection
(2) means interest at the prescribed rate from the time the amount was so lent
until repayment.
(7)
Subject to this section, the Board may make a loan under subsection (2) on such
terms as it thinks fit.
5
Valuation of assets and liabilities
127
Board’s obligation to obtain valuation of assets and protected liabilities
(1)
This section applies in a case within subsection (1) of section 114 or 115.
(2)
For the purposes of determining whether the condition in subsection (2)(a) of
the section in question is satisfied, the Board must, as soon as reasonably
10
practicable, obtain an actuarial valuation of the scheme as at the relevant time.
(3)
For this purpose—

“actuarial valuation”, in relation to the scheme, means a written valuation,
prepared and signed by a person with prescribed qualifications, of the
assets and protected liabilities of the scheme; and
15

“the relevant time”—
(a)
in a case within subsection (1) of section 114 has the meaning
given in subsection (4)(b) of that section, and
(b)
in a case within subsection (1) of section 115 has the meaning
given in subsection (3)(b) of that section.
20
(4)
For the purposes of this section, regulations may prescribe how—
(a)
the assets and the protected liabilities of eligible schemes, and
(b)
their amount or value,

are to be determined, calculated and verified.
(5)
Subject to any provision made under subsection (4), those matters are to be
25
determined, calculated and verified in accordance with guidance issued by the
Board.
(6)
In calculating the amount of any liabilities for the purposes of this section, a
provision of the scheme which limits the amount of its liabilities by reference
to the value of its assets is to be disregarded.
30
(7)
The duty imposed by subsection (2) ceases to apply if and when the Board
ceases to be involved with the scheme.
(8)
In this section references to “assets” do not include assets representing the
value of any rights in respect of money purchase benefits under the scheme.
128
Approval of valuation
35
(1)
This section applies where the Board obtains a valuation in respect of a scheme
under section 127.
(2)
Where the Board is satisfied that the valuation has been prepared in
accordance with that section, it must—
(a)
approve the valuation, and
40
(b)
give a copy of the valuation to—
(i)
the Regulator,

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
86

(ii)
the trustees or managers of the scheme, and
(iii)
any insolvency practitioner in relation to the employer or, if
there is no such insolvency practitioner, the employer.
(3)
Where the Board is not so satisfied, it must obtain another valuation under that
section.
5
129
Binding valuations
(1)
For the purposes of this Chapter a valuation obtained under section 127 is not
binding until—
(a)
it is approved under section 128,
(b)
the period within which the approval may be reviewed by virtue of
10
Chapter 6 has expired, and
(c)
if the approval is so reviewed—
(i)
the review and any reconsideration,
(ii)
any reference to the PPF Ombudsman in respect of the
approval, and
15
(iii)
any appeal against his determination or directions,

has been finally disposed of.
(2)
For the purposes of determining whether or not the condition in section
114(2)(a) or, as the case may be, section 115(2)(a) (condition that scheme assets
are less than protected liabilities) is satisfied in relation to a scheme, a binding
20
valuation is conclusive.

This subsection is subject to section 155(3) and (4) (treatment of fraud
compensation payments).
(3)
Where a valuation becomes binding under this section the Board must as soon
as practicable give a notice to that effect together with a copy of the binding
25
valuation to—
(a)
the trustees or managers of the scheme,
(b)
any insolvency practitioner in relation to the employer or, if there is no
such insolvency practitioner, the employer.
(4)
A notice under subsection (3) must be in the prescribed form and contain the
30
prescribed information.
Refusal to assume responsibility
130
Schemes which become eligible schemes
(1)
Regulations may provide that where the Board is satisfied that an eligible
scheme was not such a scheme throughout such period as may be prescribed,
35
the Board must refuse to assume responsibility for the scheme under this
Chapter.
(2)
Where, by virtue of subsection (1), the Board is required to refuse to assume
responsibility for a scheme, it—
(a)
must issue a withdrawal notice, and
40
(b)
give a copy of that notice to—
(i)
the Regulator,
(ii)
the trustees or managers of the scheme, and

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
87

(iii)
any insolvency practitioner in relation to the employer or, if
there is no such insolvency practitioner, the employer.
(3)
In this section “withdrawal notice” means a notice in the prescribed form
which—
(a)
states the time from which the Board ceases to be involved with the
5
scheme (see section 132), and
(b)
contains such other information as may be prescribed.
131
New schemes created to replace existing schemes
(1)
The Board must refuse to assume responsibility for a scheme (“the new
scheme”) under this Chapter where it is satisfied that—
10
(a)
the new scheme was established during such period as may be
prescribed,
(b)
the employer in relation to the new scheme was, at the date of
establishment of that scheme, also the employer in relation to a scheme
established before the new scheme (the “old scheme”),
15
(c)
a transfer or transfers of, or a transfer payment or transfer payments in
respect of, any rights of members under the old scheme has or have
been made to the new scheme, and
(d)
the main purpose or one of the main purposes of establishing the new
scheme and making the transfer or transfers, or transfer payment or
20
transfer payments, was to enable those members to receive
compensation under the pension compensation provisions in respect of
their rights under the new scheme in circumstances where, in the
absence of the transfer or transfers, regulations under section 130
would have operated to prevent such payments in respect of their
25
rights under the old scheme.
(2)
Where, under subsection (1), the Board is required to refuse to assume
responsibility for a scheme, it—
(a)
must issue a withdrawal notice, and
(b)
give a copy of that notice to—
30
(i)
the Regulator,
(ii)
the trustees or managers of the scheme, and
(iii)
any insolvency practitioner in relation to the employer or, if
there is no such insolvency practitioner, the employer.
(3)
In this section “withdrawal notice” means a notice in the prescribed form
35
which—
(a)
states the time from which the Board ceases to be involved with the
scheme (see section 132), and
(b)
contains such other information as may be prescribed.
Cessation of involvement with a scheme
40
132
Circumstances in which Board ceases to be involved with an eligible scheme
(1)
Where an assessment period begins in relation to an eligible scheme, the Board
ceases to be involved with the scheme, for the purposes of this Part, on the
occurrence of the first withdrawal event after the beginning of that period.

Pensions Bill
Part 2 — The Board of the Pension Protection Fund
Chapter 3 — Pension protection
88

(2)
For this purpose the following are withdrawal events in relation to a scheme—
(a)
the issuing, by an insolvency practitioner in relation to the employer, of
a notice under section 111(2) which confirms that a scheme rescue has
occurred;
(b)
the issuing, by the Board, of a withdrawal notice under section 117(3)
5
(Board’s confirmation that a scheme rescue has occurred);
(c)
in a case where a person who is or was such an insolvency practitioner
issues a notice under section 111(4)—
(i)
the issuing, by the Board, of a withdrawal notice under
subsection (5) below, or
10
(ii)
where no such withdrawal notice is issued, and no further
insolvency event occurs in relation to the employer, during the
period of six months beginning with the date on which the
notice was issued under section 111(4), the expiry of that period;
(d)
the issuing, by the Board, of a withdrawal notice under section 130 or
15
131 (refusal to assume responsibility for a scheme).
(3)
Subsection (4) applies where the Board—
(a)
receives a copy of a notice under section 111(4) in relation to an eligible
scheme, and
(b)
it has not, since the last insolvency event occurred in relation to the
20
employer, ceased to be involved with the scheme.
(4)
The Board must, on receiving the notice, determine whether any insolvency
event—
(a)
has occurred in relation to the employer since the date that notice was
issued, or
25
(b)
is likely to so occur before the end of the period of six months beginning
with that date.
(5)
If the Board determines under subsection (4) that no insolvency event has
occurred or is likely to occur as mentioned in that subsection, it must—
(a)
issue a withdrawal notice, and
30
(b)
give a copy of that notice to—
(i)
the Regulator,
(ii)
the trustees or managers of the scheme, and
(iii)
the employer.
(6)
Where the Board ceases to be involved with a scheme by virtue of an event
35
within subsection (2)(a) or (c)(ii), it must—
(a)
issue a withdrawal notice, and
(b)
give a copy of that notice to—
(i)
the trustees or managers of the scheme,
(ii)
the Regulator, and
40
(iii)
the employer.
(7)
In subsections (5) and (6) “withdrawal notice” means a notice in the prescribed
form which—
(a)
states the time from which the Board ceases to be involved with the
scheme, and
45
(b)
contains such other information as may be prescribed.